Tag Archives: Retirement

Rethinking retirement

By Robert Wright /February 04,2021/

If you were working towards a retirement date and Coronavirus has meant a change of plans, it can be hard to move the goal posts. Could you gradually reduce your hours to make stretching out your years at work more do-able?

If your work is stressful, consider whether you could reduce or change your responsibilities. For jobs that are physically demanding, do you have the option to shift into a role that is less hands-on – such as training others, workplace safety or compliance monitoring?

Or, if the idea of extending out your retirement date is unappealing, another option could be taking some time off. If you have accrued a lot of annual or long-service leave, then the financial impact may be negligible.

Three smart super strategies

Making changes to your super can help you get your plans back on track so you can achieve your retirement goals. Here are some strategies that can boost your super or minimise your tax in your final years of working.

1. Make additional contributions. You can add more to your super using either your before-tax salary or your take-home pay. The most common ways to do this are by salary sacrificing, making a tax-deductible personal contribution, using some of your unused concessional cap from previous financial years in a catch-up contribution, or using the bring-forward rule to make a large, one-off contribution to your super.

• Transition-to-retirement (TTR) strategy. A TTR strategy lets you access some of your super while you’re still working. It’s only available for people who are aged 60 or above. The most common way to use this strategy is to continue working full-time and salary sacrificing into super while drawing a tax-free income from your TTR pension. So while you’re growing your super you’re also paying less tax in the lead up to retirement.

• Review your asset allocation: Seek financial advice to review how your super is being invested to meet your retirement needs.

Try a different kind of work

If you’re not enjoying your work, or your work has finished up, then consider lifting your gaze towards something new:

Learn. Flexible learning options have never been more accessible or plentiful. They can also be very affordable, with low cost or free courses bringing easy learning within reach. The time it will take you to complete a course is a small investment for the benefit of undertaking more satisfying work.

Start a business. Business ownership is a popular option for 8% of Australians aged between 50 and 64. What’s more, if you start a business as an older person, you have a better chance of success than if you’d started at an earlier stage of life. This is because you’ve accumulated valuable work experience, built broad and deep professional networks, and developed life skills, wisdom and resilience that could help your business succeed. It’s important to remember that starting a business requires upfront capital investment and there are risks involved in running a business, so it’s best to seek professional advice before you do so.

Career coaching. If you want to change what you do for work, a career coach can help you explore your options and advise you on your next step.

Get a sounding board

When you have plans in place, it is unsettling when they are disrupted. Your financial adviser can explore your options with you, advise you on the impact of different strategies and recommend away forward. So it’s important to check in with them, especially before you make any changes to your super.

Source: Colonial First State

How to get Aged Care at Home

By Robert Wright /November 18,2020/

Older people who are struggling to live at home and take care of themselves often face a dilemma. Many don’t want to move into aged care accommodation, but they recognise the gardening, cleaning, cooking or showering is impossible or becoming more difficult.

Some worry about placing a burden on their loved ones, others can’t afford the services they need. This year in particular with coronavirus health concerns for the elderly, many people who were looking to move into an aged care facility may have decided to stay home instead.

For those who might be weighing up or delaying moving into an aged care facility this year, these Government-funded care programs may be of interest.

Commonwealth Home Support Program

For those who are having trouble with everyday tasks and needing a little extra help, the Commonwealth Home Support Program might be useful.

The program is available to anyone aged 65 or older (50 years or older for Aboriginal or Torres Strait Islander people). It’s also open to anyone on a low income or homeless and 50 years or older (45 years or older for Aboriginal and Torres Strait Islander people).

It’s not a free service. You may need to help pay for the cost of services if you can afford it, but you won’t need to pay the full cost.

The program covers services such as meals and other food services, help with showering and grooming, help with medicines, health and therapy services and respite care.

Home Care Packages

Another government-funded service provides a higher level of support for older people living in their own homes.

Home Care Packages are for older people with more complex care needs. The package will help fund and organise many of the same services covered by the Commonwealth Home Support Program but you’ll need to be assessed first to determine your level of need. There are four levels ranging from basic care to high care.

The assessment will also consider how much you can contribute to the cost of your care. There are two types of fees:

• A basic daily fee (up to $10.75).
• An income-tested fee (up to $30.86 per day) is applicable for some. If you have to pay this fee, there are annual and lifetime limits on how much you can be asked to pay.

Where to begin?

Once your level under the Home Care Packages has been assessed and funding has been allocated, it’s up to you to choose a service provider in your area from an approved list on the Home Care Packages website. The government then pays the provider a subsidy to arrange the care that suits you.

Look for flexibility

The providers of Home Care Packages might all be following the same regulations set by the government, but they’re a mix of private and not-for-profit organisations and all operate quite differently, says Dana Sawyer, CEO of My CarePath, a private service that provides advice on aged care options.

Sawyer says it’s important to find a provider that is flexible and “will actually deliver true consumer directed care”.

Everyone’s needs are different, says Sawyer. “For example, you might have someone who will need assistance every morning to shower, dress and get ready for the day. But once they’re up and going, they’re pretty good for the day and they can manage on their own. So, they’ll need an hour of service every day.

“Whereas someone else might live with a partner or family member who helps with showering and dressing. But the helper needs a break, so they might need someone to come in for three hours twice a week so they can go out to shops,” she says.

Understanding the financial intricacies of Home Care Packages is also important, says Sawyer. Providers charge different case management and administration fees, which comes out of the government funding allocated to you.

“Often we find people are in a very vulnerable position when they’re looking at aged care services. They may have had a fall or a hospital admission, or suddenly realise they can’t cope at home or even worse, there may be abuse happening within the home,” she says.

The thing to remember, is that there is plenty of help available – both private and government-funded.

Source: Colonial First State

Why it’s important to think about insurance ahead of retirement

By Robert Wright /November 18,2020/

If retirement’s coming up on your horizon, you’ll be keen to make sure your plans stay on track. It makes sense to concentrate on things you can control, such as insurance.

Too-high premiums can chew away at the foundations of your savings, at a time when they’re more important than ever. Under-insure and one day your floor may collapse, undone by events you can’t foresee.

Cover for a changing life

As you get close to retirement, you may want to make sure you’re holding the right insurance for the lifestyle you want. Here’s a simple checklist that may help:

• Ask yourself how much money your family would have if you were to pass away or become disabled.
• Compare that with how much money your family might need in the same situation, including how they’d manage paying for day-to-day costs like child-care and mortgages.
• The difference between the two can help you work out how much insurance you may need.

Many of us take out insurance and are done with it – it’s enough to know we have the proverbial rainy day covered off. However, with economic clouds gathering, now’s a good time to review what you’ve already got and assess if it’s still right for you and your needs.

So, dig out your existing insurance agreements, taking special note of when they’re due to expire and your continued eligibility for the policies they hold.

An important area for many Australians is insurance held inside superannuation.

Insurance inside super

Insurance inside super can help us out when we really need it. Like any type of insurance, it works best when you’ve got the right level of protection for your situation. As you head towards retirement and your life changes, so might your priorities.

As well as life insurance, you might have total and permanent disablement (TPD) inside super. TPD cover may provide you with a lump-sum payment if you suffer a disability that prevents you from ever working again.

TPD could help you pay for ongoing medical expenses, alterations to your home to make day-to-day life easier and help provide future financial stability.

Total salary continuance, also known as income protection, is designed to pay a monthly benefit of up to 75% of your pre-disability regular income if you’re unable to work due to injury or illness.

Typically, within super, income protection provides you with cover either for a two-year or five-year period or until you turn 65, depending on the terms in your employer plan.

What to look out for

There are pros and cons of insurance within super. Things to think about if you’re approaching retirement include:

• Cover through super may end when you reach a certain age (usually 65 or 70). That’s generally different to cover that’s outside a super account.
• Taxes may be applied to TPD benefits depending on your age.
• Claim payments may take longer, as the money is normally paid by the insurer to the trustee of the super fund before it’s paid to you or your dependants.

Don’t double up and stay flexible

As part of your review, it’s also a good idea to check insurance you hold inside super against other policies you might have outside super.

Then compare your cover, check whether you have any insurance double ups – if you have more than one super account with the same type of insurance, you may be paying for more insurance than you need.

As well as comparing the level of cover you get, consider any exclusions, such as the treatment of any pre-existing medical conditions, and waiting periods. Remember that if you do cancel your insurance, you might lose access to features and benefits and may not be able to sign back up at the same rate.

It’s also important to disclose your situation to your insurer honestly. Otherwise, the insurer may be entitled to refuse your claim.

Any change calls for flexible thinking, whatever age you are. The lead up to retirement is a great time to review your insurance and adapt to changing circumstances.

Source: AMP

Many Aussies in the dark about retirement

By Robert Wright /November 18,2020/

There’s always been a lot of unknowns when it comes to retirement but throw a global pandemic into the mix, and we’re feeling more uncertainty than ever before. Things we once thought of as quite certain– like being employed, getting decent returns on investments and savings, and a continual rise in house prices – seemingly changed overnight.

And while that’s all led to a whopping 76% of us believing it’s more important than ever to plan for a secure financial future, we still don’t know what that means when it comes to retirement.

The first step is figuring out how much you need. Once you know the figure you’re aiming for, how much you currently have, and how many years you are away from finishing work, you can put a plan in place to help you reach your retirement savings goals.

Ways you might consider doing this include:

• Topping up super with additional contributions. (Be aware of contribution caps).
• Replacing any super that’s been accessed through the COVID early release of super scheme.
• Paying down personal debt like loans or credit cards.
• Making additional home loan repayments so you own your home sooner.

Consolidating your super accounts so you aren’t paying multiple fees. (Check you don’t lose important insurance benefits or won’t be charged an exit fee first).

Plan to protect retirement savings

COVID has made us pay closer attention to how our retirement savings are invested and some people may have seen their super balances drop. If you’ve got 15 or more years before you retire, chances are, your balance will likely have time to recover with the usual long-term market movements. But there’s no guarantee, and it doesn’t mean you can just sit back and relax.

It’s worthwhile checking what type of superannuation investment product your retirement savings are invested in. Diversified or balanced options can help offer some protection against volatile market swings because they’re made up of assets other than shares, like buildings and other infrastructure (although these are still susceptible to fluctuations).

One of the most important things to do is avoid making hasty decisions. Do your research, and if possible speak to your financial adviser if you’re wondering whether it’s the right time to switch investment options or move your super from one fund to another. There may be a risk of locking in losses or unfavourable tax components that could have a significant impact on the kind of retirement you’d like.

Don’t bank on working for longer

Given what we’ve seen with COVID and the economy, it’s hardly surprising 30% of people said they were worried about sequencing risk – a market crash or downturn which significantly reduces the value of super savings. And if that happened, over 50% of us say we’ll work for longer to build our retirement savings back up.

However, that might not be a failsafe backup plan. ABS data shows that of the people who retired in 2018-19:

• 21% had to stop working due to sickness, injury or disability
• 11% retired because they were made redundant or couldn’t find work

Add to that the average retirement age was just 55.4 years, working for longer to top up your super isn’t an option for everyone.

Educating yourself and taking control of your financial future can help alleviate concerns about retirement. Having a plan and feeling financially prepared can give you peace of mind. You spend your life working hard, and deserve to feel excited, not anxious, about retirement.

Source: AMP